Madirazu Jagannadha Rao vs Somu Lakshminarayana and Another

Anantakrishna Aiyar, J.—The 2nd defendant is the appellant in this second appeal. He is the adopted son of the 1st defendant, his adoption

having taken place in 1917. The 1st defendant, the adoptive father, executed an agreement in favour of the plaintiff to sell some Immovable

property belonging to the joint Hindu family composed of the 1st and 2nd defendants, In Exhibit A, which is the agreement, the 1st defendant

undertook as follows:

I shall include my adopted son Jagannadha Rao also as a party to the sale-deed and execute the document of sale in your favour.

The 1st defendant having defaulted to carry out his part of the contract the plaintiff filed the original suit out of which this second appeal has

arisen for specific performance of this agreement to sell, making the father as the 1st defendant and the adopted son as the 2nd defendant to the

suit. The 1st defendant set up a plea that the plaintiff himself agreed to secure the conjunction of the 2nd defendant, and the plaintiff not having

done so, the suit for specific performance should fail for that reason. The 2nd defendant pleaded that the agreement was not entered into for

necessary purposes and that under the adoption deed, Exhibit II, dated 12th February, 1917, the adoptive father, 1st defendant, undertook not to

alienate any of the family properties without the conjunction of the 2nd defendant also in the same. The Trial Court framed six issues of which the

4th was ""whether specific performance can be granted"" and the 5th, ""whether the 2nd defendant is bound by the contract entered into by the 1st

defendant"". Another issue was raised whether the plaintiff undertook to procure the conjunction of the 2nd defendant also in the same. Both the

Lower Courts found against the 1st defendant''s plea that the plaintiff undertook to get the 2nd defendant also to join in the sale-deed. The first

Court granted a decree for specific performance in so far as 1st defendant was concerned. One reason why the suit against the 2nd defendant was

dismissed is stated in paragraph 14 of the first Court''s judgment:

Under Exhibit 11, the adoption deed, the 1st defendant undertook not to alienate any family property. The 2nd defendant is a major and it has not

been satisfactorily proved that the 1st defendant is the family manager. Under these circumstances I find that the 2nd defendant is not bound by the

contract.

I must say at this stage that I am not able to follow the learned Munsif in the observation that, simply because the 2nd defendant, the adopted

son, is a major, there must be some satisfactory proof that the 1st defendant, the adoptive father, is the manager. The learned Munsif observes:

It has not been satisfactorily proved that the 1st defendant is the family manager.

I cannot understand what sort of proof is necessary to constitute the adoptive father, the only other member of the joint Hindu family besides the

adopted son, a joint family manager. Under Hindu Law the 1st defendant is the joint family manager and unless any other member proves that

owing to specific agreement or for some other reasons the 1st defendant has ceased to be manager, it is not necessary to prove that the 1st

defendant is the joint family manager. The learned District Munsif passed a decree against the 1st defendant only, and dismissed the suit against the

2nd. On plaintiff''s appeal, the learned Subordinate Judge went into the question whether the agreement entered into by the 1st defendant to sell the

properties to the plaintiff, Exhibit A, was binding upon the joint family. He found that as early as 1912 there was a mortgage debt incurred by the

1st defendant long before the adoption of the 2nd defendant. He also found that the mortgagee filed a suit and obtained a decree (Exhibit C) for

Rs. 2,000 and odd on the footing of his mortgage. After a'' portion of the decree amount had been given up by the mortgagee decree-holder, there

was a large amount of about Rs. 2,000 due under the decree of 1921. It was to pay off that decree debt and for a fresh consideration of Rs. 200

that the 1st defendant executed this agreement to sell the properties to the plaintiff, and he took an advance of Rs. 100 out of the Rs- 200 at the

time of the agreement of sale. Of course the Lower Appellate Court held that the 1st defendant was the manager. On these findings the Lower

Appellate Court modified the decree of the first Court and granted a decree for specific performance against the 2nd defendant also. This second

appeal has accordingly been preferred by the 2nd defendant. Two main points have been raised by the learned Advocate for the appellant. One

was that in a suit for specific performance proper, in pursuance of an agreement entered into by the 1st defendant (in whatever capacity he might

have entered into that agreement), strangers ought not to have been made parties to the suit. The other was that, having regard to the recent Privy

Council case reported in (1929) ILR 51 771 (Privy Council) the agreement in question, Exhibit A, is inadmissible in evidence and consequently the

suit must fail for want of legal evidence to prove the agreement. I will take up the first question first. No doubt u/s 27 of the Specific Relief Act suits

for specific performance of agreement to sell Immovable property would ordinarily be maintainable only against parties to such agreement, and

against certain other persons who are specifically mentioned ""in the several clauses of that section. It would no doubt have been open to the 2nd

defendant, the adopted son, when he was made a party'' to the suit, to plead that he is not a necessary or proper party to such a suit and to have

his name removed from the suit, and even allow the plaintiff to obtain whatever decree he can, against the 1st defendant either personally or in the

capacity as manager; the Court might grant a decree against the 1st defendant, in which case it would have been open to the 2nd defendant, if

necessary, in a fresh litigation to have the questions decided as between the plaintiff on the one hand and the 2nd defendant on the other. But

reading the 2nd defendant''s written statement, it is clear that that was not the line of defence he purported to take. There he sets out various pleas

on the merits which, if proved, would, have had the result of having the suit dismissed as against the 2nd defendant. For example, he pleaded that

there was no necessity to sell and that there was no mortgage binding upon him and put forward other similar pleas. No doubt there is the general

statement that the suit against the 2nd defendant should be dismissed with costs. Under these circumstances one would like to know how the Trial

Court understood the pleadings in the case. No issue raised the question whether the 2nd defendant was a proper party to the suit or not. I am not

able to see anything in Section 27 of the Specific Relief Act which would prevent a person in the position of the 2nd defendant, when made a party

to a suit, from having the whole matter agitated and adjudicated on finally in this very same suit, if he chose to do so. Having, therefore, joined issue

on the merits of the controversy and having failed, I do not think it is open to the 2nd defendant in these circumstances to raise for the first time in

second appeal the point that the frame of the suit according to Section 27 of the Specific Relief Act ought to have been against the 1st defendant

only. The learned Advocate also argued that at one stage of the trial of the suit, the plaintiff would appear to have been content with taking a

decree against the 1st defendant. The learned District Munsif makes an observation to that effect in the course of his judgment. That was evidently

at the time when plaintiff''s 2nd witness--the plaintiff--was being examined. That offer was not accepted either by the 1st or by the 2nd defendant

with the result that the plaintiff''s examination had to be completed and two other witnesses had also to be examined on the side of the plaintiff.

P.W. 4 proves the binding nature of the debts which were purported to be discharged by means of the sale to be brought about by the agreement-

-Exhibit A. There would have been absolutely no relevancy in letting in evidence of P.W.4 if the parties agreed that the case should take that

course at that stage as suggested here. I am, therefore, of opinion that, whatever might have been the proposal made on the side of the plaintiff at

one stage of the trial, the same was not accepted by the defendants, and consequently this second appeal must be disposed of on the footing that

there was n6 such proposal at all-The 2nd defendant having pleaded on the merits and having let in evidence on the merits in support of his pleas

and having failed with findings against him on all questions that could possibly have arisen between the plaintiff on the one hand and the 2nd

defendant on the other, I do not think it is open to the 2nd defendant at this stage to ask me to set at large all these findings and to dismiss the 2nd

defendant from the suit at this stage of the litigation. I feel, therefore, compelled to overrule this contention of the appellant in the circumstances.

The second contention raised by the learned Advocate for the appellant is based upon the recent decision of the Privy Council reported in

(1929) ILR 51 771 (Privy Council) . As the date of this judgment is 16th July, 1929, and as this second appeal was filed in. 1926, the learned

Advocate, as is usual in such cases, took the precaution to file an additional ground of second appeal raising a new point. The purport of the

argument raised by the learned Advocate on this point is this. The Privy Council has decided, according to his contention, that in the case of an

agreement to sell immovable property an interest in such property is created by such agreement. Having regard to Sections 17 and 49 of the

Registration Act, such agreement requires registration and Exhibit A not being registered, is not admissible in evidence. When the original evidence

is not available for want of registration, secondary evidence could not be let in and therefore the plaintiff''s suit must have been dismissed in limine

for want of legal evidence to prove the agreement. To this it was replied by the learned Advocate for the respondents that the observations of the

Privy Council should be limited to the document they had to consider in that particular case. My, attention was drawn to the terms of the document

which the Privy Council had to consider- The document is set out in extenso in pages 766 and 767 of the judgment: The one party is called the

vendor and the other party is called the vendee, the words ""vendor"" and ""vendee"" occurring in several places in the document. In paragraph 9

these words occur:

In virtue of this sale and agreement, if the vendee considers necessary, the vender will always be ready to execute and register a power of attorney,

etc., etc.

Again in paragraph 11:

Should the vendee not be able to get mutation of names done in his name and get full and complete possession, the vendor in such a case directs

the vendee to pay the balance, etc., etc.

Then there is the undertaking in paragraph 9 to give the vendee any other document or help the vendee may demand. Paragraph 12 is also

important--""Schedule of properties sold is hereunto annexed"". Now, when construing the words used by their Lordships in the course of their

judgment it is proper that we should have regard to the document which was the subject of dispute before them. Having set out the important

words occurring in the document, I proceed to notice the several passages occurring in the judgment of the Privy Council to which my attention

was drawn by the learned Advocates on the one side or the other. At page 769 this is what the Privy Council says:

On the first question the Subordinate Judge by whom the suit was tried was of opinion that the document was a sale-deed. The High Court

differed from this conclusion. The learned Judges held that the document ought to be ''treated as being an agreement for sale rather than as a sale-

deed .

The Privy Council observes:

Their Lordships have no doubt that the view taken of it by the Subordinate Judge was right.

That being so, it is absolutely clear that the Privy Council construed the document before them as a ""sale-deed"". The further discussion, in my

view, is relevant only for the purpose of considering whether a provision in a sale-deed by which the vendor undertakes to execute any further

document that the vendee may ask him to execute would enable the vendee to put in evidence the sale-deed. In my view that is the purport of the

whole of the subsequent discussion in the other portions of the judgment of the Privy Council. Their Lordships observe at page 770:

If an instrument which comes within Section 17 as purporting to create by transfer an interest in Immovable property is not registered, it cannot be

used in any legal proceedings to bring about indirectly the effect which it would have had if registered.

This observation, in my view, confirms the suggestion that the document in that particular case did create an interest in Immovable property in

the transferee and it is with reference to that document that those observations were made by the Privy Council. The learned Advocate for the

appellant, however, drew my attention to two passages which, he submitted, were inconsistent with the view that I have set forth above. The

passages are:

They think that an agreement for the sale of Immovable property is a transaction ''affecting'' the property within the meaning of the section,

inasmuch as, if carried out, it will bring about a change of ownership. The intention of the Act is shown by the provision of Section 17 (2) (v),

which exempts from registration and, therefore, frees from the restriction of, Section 49 a document which does not itself create an interest in

Immovable property but merely creates a right to obtain another document which will do so. In the face of this provision, to allow a document

which does itself create such an interest to be used as the foundation for a suit for specific performance appears to their Lordships to be little more

than an evasion of the Act.

Reading the sentences as a whole, I think that what their Lordships meant there was that the document before them was a document which

created an interest in Immovable property; in fact, the whole interest in the property was transferred by that document of sale; and their Lordships

observe that simply because there was an agreement to execute a further document if called upon, the same should not be utilised as evidencing an

agreement in suit for specific performance. I do not think that the learned Advocate for the appellant is right in his contention that every agreement

for the sale of Immovable property should be treated, after the decision of the Privy Council, to be an agreement affecting Immovable property

within the meaning of the section. I am not able to understand the observations of their Lordships in the way suggested by the appellant. On the

other hand, we have got Section 54 of the Transfer of Property Act which specifically declares that

A contract for the sale of Immovable property does not of itself create an interest in, or charge upon, such property.

It may not be irrelevant at this stage to call attention to the fact that in cases where an agreement to sell Immovable property contained a recital

of part payment of the price, the Privy Council had to consider the question whether in respect of the said advance a charge was created on the

property. The Privy Council held that a charge was created and that such documents require registration. The practice in India was that even in

cases where there was an advance, such documents were treated as mere agreement to sell and as not creating any sort of interest in Immovable

property. Having regard to the decision of the Privy Council, the Indian Legislature had to intervene and Act II of 1927 was passed to the

following effect:

In Sub-section (2) of Section 17 of the Indian Registration Act the following explanation shall be added, namely:

Explanation,--A document purporting or operating to effect a contract for the sale of Immovable property shall not be deemed to require or ever

to have required registration by reason only of the fact that such document contains a recital of the payment of any earnest money or of the whole

or any part of the purchase money.

If I understand the argument of the learned Advocate for the appellant rightly, he suggests that the Privy Council decision referred only to cases

where there was payment of earnest money, in which case the Privy Council held that the document came under the heading of compulsorily

registrable documents, and should be registered before the same could be admitted in evidence, that the Indian Legislature restored the law as it

was understood in India by Act II of 1927; but in cases where there is no earnest money or part payment made, an agreement to sell Immovable

property should be taken to create not a ''""charge"" (a word which would directly come under Act II of 1927) but ""an interest"" in Immovable

property, which, having regard to Sections 17 and 49 of the Registration Act, would require to be compulsorily registered before the same could

be received in evidence. I do not think that the Privy Council case lays down any such proposition as the learned Advocate for the appellant asks

me to assume. If that be so, the provisions of Section 54 of the Transfer of Property Act and also of the Act II of 1927 would surely have been

considered by their Lordships. Further, in the last portion of the judgment of the Privy Council their Lordships make the following observation:

Their Lordships think that no good purpose would be served by a detailed examination of the decisions of the Indian Courts. They have the

satisfaction of knowing that the principle which has been enunciated above is in accordance with the recent decisions in most of the High Courts.

Their Lordships refer to three cases, one from each of the High Courts of Calcutta, Bombay and Madras. The Calcutta case quoted is Sanjib

Chandra Sanyal v. Santosh Kumar Lahiri ILR (1921) C. 507 the Bombay case is Ramling Parivatayya v. Bhagwant Sambhuappa I.L.R.(1925) B.

334 and the Madras case is Satyanarayana v. Chinna Venkata Rao I.L.R.(1925) M. 302 : 50 M.L.J. 674. Referring to these cases one is

strengthened in the view set forth above. In the case in Sanjib Chandra Sanyal v. Santosh Kumar Lahiri I.L.R.(1921) C. 507 Rankin, J., as he then

was, made the following observations:

From its terms and from the admitted circumstances I think it c]ear that it (the suit document) was intended to operate as a present demise to the

plaintiff for five years

That was a case where there was not merely an agreement to lease but an actual lease which operated or was construed to operate as a

present demise. The case in Railing, Parwatayya v. Bhagwant Sambhuappa I.L.R.(1925) B. 334 made the distinction between an agreement to sell

which does not convey any immediate interest in Immovable property and a document which purports to create an interest in presenti in the

property that was the subject of the agreement. The last of the cases is the case reported in Satyanarayana v. Chinna Venkatarao I.L.R.(1925) M.

302 : 50 M.L.J. 674 a judgment of the late learned Chief Justice of this Court and of Mr. justice Reilly. That was a case where the Court had to

consider whether a suit for specific performance would lie at the instance of a vendee when, owing to any default on the part of, the vendor, the

deed of sale in the possession of the vendee was not presented for registration in due course., The Court held that such a deed of sale was

inadmissible in evidence unless it was registered according to the provisions of the Registration Law. That was a case where an actual deed of sale,

and not an agreement to sell, was under consideration, and the Court held that such a document was inadmissible in evidence.

I have, therefore, come to the conclusion that the Privy Council only confirmed the principle that was discussed in the Indian Courts in the

cases referred to by them; and that the observations should be taken to refer only to documents which effect a transfer in presenti of an interest in

Immovable property. In the view I take, the document, Exhibit A, was properly admissible in evidence, and I also overrule this second contention

raised by the learned Advocate for the appellant. Both the contentions failing, the second appeal is dismissed with costs.